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Sterling moves up to recent highs against the majority of our most traded currency pairs as highlighted below. Lots of uncertainty remaining in the Euro Zone driving the recent volatility in the market. Many questions in Europe remain unanswered, with issues ranging from debt levels to political uncertainty.


£/€
Range of the week: 1.2456 – 1.2577 (Highest level since Nov 2008)
Variance of the week on £10k=€121

The Eurozone narrowly avoided slipping back into recession yesterday after posting a 0.0% GDP figure (up from -0.3% in the previous quarter). Its worth noting the stark contract in the fortunes of various EU countries. The German economy still propping up the rest of Europe after posting growth figures of + 0.5% compared to the underperforming Italian economy which contracted at a rate of – 0.8%.

The Greek situation continues to weaken the Euro with movement up above the 1.25 (0.80) mark. Greek politicians have not been able to form a coalition which means that further polls will take place next month. The concerns are that the Greek population are heavily favouring the parties that want to move away from the tough austerity measures demanded from the EU. Any talk of attempts to renegotiate the terms of the bailout that was previously agreed is likely to be damaging for the strength of the Euro. The Germans are taking a firm stance and are not prepared to discuss the terms.

Unemployment in the UK reduced slightly to 8.2%, down from 8.3% last month. The health of the employment sector will continue to be watched closely after the UK recently slipped back into recession. Its worth noting that there is increasing number of people taking wage cuts and part time work which gives a slightly over optimistic view on the state of the UK jobs market.


£/$
Range of the week: 1.5888 – 1.6122 (4 week low)
Variance of the week on £10k= $234

A fairly subdued forecast was released today in the latest Bank of England Inflation report. The report suggests that inflation will be around 1.6% in 2 years time and up to 1.8% in 3 years. These estimates mean that the BOE will again fall short of their target and prompts further suggestion that more quantitative easing will be required to boost the economy. The news has seen Sterling weaken against the US Dollar down to a 4 week low.

There is continued hope that we will see a gradual recovery in the UK but the issues in Europe have been cited as a significant threat to the economy.


£/AUD
Range of the week: 1.6017 – 1.6174 (Highest level since Oct 2011)
Variance of the week on £10k= $157

The commodity currencies (AUD, NZD, CAD, ZAR) has all been hit hard with continued weakness following escalation of the Eurozone crisis. This pullback from higher yielding currencies has been mirrored by falls in worldwide stock markets and oil prices as investors flock to safer options.


£/NZD
Range of the week: 2.0537 – 2.0897 (Highest level since Nov 2011)
Variance of the week: on £10k= $360

No major news or data for the week so far.


£/ZAR
Range of the week: 13.0190 – 13.3880 (Highest level since Aug 2009)
Variance of the week: on £10k=ZAR 3690

No major news or data for the week so far


£/CAD
Range of the week: 1.6015 – 1.6166 (Highest level since Nov 2011)
Variance of the week: on £10k=CA$151
 
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